An attorney turned whistle-blower at Colorado's second-largest foreclosure law firm has detailed to state investigators a pattern of abuses that stretch beyond the scope of their investigation into alleged overbilling practices.

Susan Hendrick testified at a hearing Thursday that she told the state attorney general's office about bill-padding she witnessed while a lawyer at Aronowitz & Mecklenburg in Denver, conduct that investigators say needlessly cost homeowners facing foreclosure millions of dollars. She then laid out a number of other alleged abuses she says happened.

The abuses ranged from the padding of attorney hours to allegations that the law firm destroyed evidence that prosecutors were seeking in their investigation into billing practices by foreclosure law firms, according to testimony in Denver District Court.

The hearing before District Judge R. Michael Mullins was to determine whether Hendrick, an associate at Aronowitz since 2007, was a special counsel to the firm in its efforts to clean up the problems she exposed.

Attorney Robert Aronowitz, 65, testified he was "absolutely shocked" by Hendrick's revelations and that he had hired her as a special counsel to give advice on how to fix the issues she raised in several e-mails.

"I'd never seen anything like (the allegations Hendrick made) in my entire practicing career" that spans nearly 40 years, he testified.

Assistant Attorney General Erik Neusch said Aronowitz is refusing to answer investigative subpoenas fully by hiding behind the "bombshell" that Hendrick was representing the law firm and that any information she imparts violates attorney-client privileges.

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Mullins didn't rule Thursday on whether any information Hendrick culled between mid-December and March, when she left the firm, would be protected from investigative subpoenas. A decision is expected in the coming weeks.

Earlier in the hearing, Mullins ruled against Aronowitz's efforts to suppress the proceedings, a move that would have prevented public exposure of the whistle-blower's existence.

Aronowitz's lawyer, Richard Benenson, argued that the investigation of alleged overbilling under the state's Consumer Protection Act sidestepped conduct that was more likely suited for the state's attorney disciplinary commission, where all proceedings and allegations are secret.

Details of Aronowitz's lawsuit against Attorney General John Suthers were sealed until Thursday.

Aronowitz uses Xceleron — a company equally owned by himself, his attorney daughter, Stacey Aronowitz, and his son-in-law, Joel Mecklenburg — to post the notices.

Investigators say they believe the law firm inflates the cost of posting the notices by as much as six times the market rate that similar companies charge. With the Aronowitz firm charging up to $150 to post the two-page document, the padding is even higher since the employee who does the work is paid $7 plus mileage for each one, investigators say.

Hendrick hotly denied ever representing Aronowitz as a special counsel, telling Mullins that she was preparing to file her own whistle-blower lawsuit against the firm, mostly because she said she was threatened with the loss of her job if she refused to sign confidentiality agreements to silence her.

Aronowitz said the agreements were standard for the industry after nationwide investigations into robo-signing and other misdeeds by the nation's largest mortgage banks and servicers.

Hendrick said she told partners at the firm about problems she discovered, including bill-padding and other issues of unethical conduct, but didn't reveal she had been talking to investigators since last August.

Attorneys for the law firm said Hendrick stepped forward after reading a Denver Post story revealing how the attorney general's office was gathering foreclosure documents from various county public trustees.

Robert Aronowitz "certainly could have cleaned up the practices of the law firm if he were interested in doing so," she testified.

She gave brief details of telling investigators in March about alleged destruction of evidence while subpoenas seeking documents were pending.

"They used the information I gave them (in memos) to cover things up and make it more difficult to discover," she testified.

Hendrick eventually left the firm after Aronowitz discovered she was providing information to the attorney general.

"We asked her directly if she was cooperating with the AG," Robert Aronowitz testified, "and she said, 'No.' "

Asked whether Hendrick would have remained with the firm had she told the truth, Aronowitz said, "Most definitely not. We would not even be here today."

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